chief financial officer - home - australian securities …€¦ · · 2017-08-21chief executive...
TRANSCRIPT
Kerrie MatherManaging Director and
Chief Executive Officer
HALF YEAR RESULTS 201722 August 2017
Greg BothamChief Financial Officer
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This presentation has been prepared by Sydney Airport
Limited (ACN 165 056 360) (“SAL”) in respect of ASX-
listed Sydney Airport (“SYD”). SYD is comprised of the
stapled entities SAL and Sydney Airport Trust 1 (ARSN
099 597 921) (“SAT1”). The Trust Company (Sydney
Airport) Limited (ACN 115 967 087/AFSL 301162)
(“TTCSAL”) is the responsible entity of SAT1.
This presentation is not an offer or invitation for
subscription or purchase of or a recommendation of
securities. It does not take into account the investment
objectives, financial situation and particular needs of the
investor. Before making an investment in SYD, the
investor or prospective investor should consider whether
such an investment is appropriate to their particular
investment needs, objectives and financial circumstances
and consult an investment adviser if necessary.
Information, including forecast financial information,
in this presentation should not be considered as a
recommendation in relation to holding, purchasing or
selling shares, securities or other instruments in SYD or
any other entity. Due care and attention has been used in
the preparation of forecast information. However, actual
results may vary from forecasts and any variation may be
materially positive or negative. Forecasts by their very
nature are subject to uncertainty and contingencies, many
of which are outside the control of SAL and TTCSAL. Past
performance is not a reliable indication of future
performance.
Sydney Airport advises that on 2 August 2017 foreign
ownership was 29.9%.
Disclaimer
General securities warning
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4. Operational growth
5. Financials
6. Capital management
7. Passenger growth
8. Business performance
9. Investment
10. Outlook
11. Appendix
Agenda
1. Highlights
2. The customer experience
3. Sustainability and our community
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Highlights
Sustained international traffic growth with very
strong inbound
Most significant investment program since
privatisation
Positive step change in customer experience
Significant improvement in service levels and
quality of service
Hotels an exciting new business, Mantra
opened and Ibis acquired
Consulting airlines and stakeholders on long
term infrastructure development
Upgraded distribution guidance
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Strong passenger growth
• Record inbound growth of 10% on pcp over a rolling
12 months
• Strong growth from all regions, particularly Middle East
and Asia
• Stellar performance from China, Japan, South Korea,
India, Indonesia, Vietnam
• Team Sydney: DNSW, Business Events Sydney,
Tourism Australia, an unrivalled partnership
• Driving growth in jobs and the economy for NSW and
Australia
Sydney Airport has successfully competed internationally to
attract airlines and grow inbound tourism, driving significant
economic growth for NSW and Australia
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Dec-0
9
Mar-
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n-1
0
Se
p-1
0
Dec-1
0
Mar-
11
Ju
n-1
1
Se
p-1
1
Dec-1
1
Mar-
12
Ju
n-1
2
Se
p-1
2
Dec-1
2
Mar-
13
Ju
n-1
3
Se
p-1
3
Dec-1
3
Mar-
14
Ju
n-1
4
Se
p-1
4
Dec-1
4
Mar-
15
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Dec-1
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Mar-
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Rolling 12 Month Growth Rate
Foreign Nationalitites Australian Nationals
20%
1.3mpassengers
5%
2.6mpassengers
India
1,327m pop.
China & North Asia
1,560m pop.
The Americas
1,002m pop.
Europe/ Middle East
984m pop.
New Zealand & Pacific
16m pop.
South EastAsia
700m pop.15%
0.95mpassengers
14%
0.04mpassengers
Other
1,823m pop.
1.5%
1.2mpassengers
-2%
0.1mpassengers
4%
1.6mpassengers
Note: Data based on passengers flown on services between Sydney and the
respective country/region. World Population estimate of 7.4bn as at July 2016 – UN
Department of Economic & Social Affairs.
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Since 2002, 70% of our ~$4.1bn capex spend has been invested
in aeronautical capacity, airline product requirements and
operational efficiency, and improving passenger facilities
Significant investment program
Terminal 1
expansion and
improvements
Access road
improvementsPedestrian and
cycle bridge
Baggage
expansion
Airfield
aprons
Arrivals
concourse
Automated
check-in and
bag drop
Gate lounges
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Technology driving customer experience
improvements
Investment in technology and harnessing data are
delivering a superior passenger experience
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Roll out of
technology and
systems to
measure KPIs
Initial reporting
to form
‘baseline view’
of KPIs
Design of framework
and resolution process
through workshops with
BARA
Dec 2015
KPIs agreed
Jul 2015
Start of
agreement
Dec 2016
ICF endorsement
of KPI framework
Jul 2017
Implementation of
KPI framework
2015 2020 Ongoing reporting
and monitoring of
KPIs
Delivering service outcomes
In conjunction with our international airline partners, Sydney
Airport has defined service levels and is delivering
successfully against a range of KPIs
The 2015 commercial agreement struck by Sydney Airport provides a
step forward regarding service assurance at that airport and is an
encouraging sign for where SLAs are heading more generally.
ACCC Airport Monitoring Report 2015-16
The KPI regime developed and implemented with Sydney Airport
should serve as a model for Australia’s other major international
airports to consider.
Board of Airline Representatives, Airline Views, June 2017
1. On time performance
2. Passenger facilitation
3. Bussing operations
4. Baggage outcomes
5. Safety
Key performance indicators agreed with
airlines External commentary regarding our
agreement
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Airline and passenger surveys have informed a significant
program of investment in areas that matter to airlines and
passengers
Significant improvements in customer experience
by listening and responding to our stakeholders
Gate
lounge
upgrades
Queue wait
times and
mapping
Overpass
into precinct
and road
widening
P6
extension
and drop off
in peak
Pedestrian
and cycle
bridge and
taxi wait
times
Arrivals
concourse
and reclaim
upgrades
Pier C
redesign
Lifestyle
precinct
Departures/
emigration
Bathroom
upgrades
Qantas Dr
expansion
Loading
dock
upgrade
New retail
outlets
Taxi wait
time
monitoring
Reconfiguration
of Seventh St
intersection
Mantra
and AMG
construction
QF
automated
check-in
kiosks and
bag drop
Arrivals
Concourse
Investment underwayT1 T2 Investment underway
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Improved customer service scores and service
quality
The scope and priority of each service project has been
informed through engagement with our passengers, airlines
and stakeholders
T1 customer satisfaction scores
• Sydney Airport has been investing heavily over the
last few years to improve the customer experience
• The scope and priority of each project has been
informed through engagement with our business
partners, passengers and industry specialists
• Sydney Airport has received its highest ever
customer service scores this half
• Finalist in the Customer Service Institute of
Australia awards (CSIA)
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Sustainability leadership
Sydney Airport rated a global sustainability leader.
Sustainability is driving positive outcomes for the business and
our stakeholders
Achieved Level Three
Carbon Accreditation
and delivered
25.6% per pax
reduction in carbon
intensity since 2010
‘AA’ rating
achieved
‘Leading’rating for our
sustainability reporting
33% of our international
capacity is from new
quieter, fuel efficient,
next generation aircraft
Recognised as industry
leader in sustainability by
RobecoSam, and sitting in
top 15% of the industry globally
Development of our Diversity
and Inclusion Strategy
36.7%Female representation
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Local community initiatives
Sponsoring of sport and the arts
Tourism/festivals
Deepened commitment to Sydney and our
community
A strengthened commitment to and investment in the
community, the environment, sport and the arts
• Sydney Festival
• Sydney Fringe Festival
• Vivid Sydney
• Parramasala
• Chinese New Year
• Study NSW
• Newtown Festival
• Museum of Contemporary Art
• Sydney Symphony Orchestra
• Women’s Greater Western Sydney
Giants AFL
• Women's rugby sevens
• Sydney Swans
• Live Life Get Active
• Sutherland Shire Netball Association
and a vast array of other local sporting
clubs
• Sydney Community Foundation
• Cure Cancer Australia
• Kids Teaching Kids
• Clontarf Foundation
• Conservation Volunteers Australia
• Cook Community Classic
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2017 distribution guidance increased to 34.5 cents, reflecting
strong capital management outcomes and excellent
operational performance
Upgraded distribution guidance
Distributions Strong growth
First half 2017 distribution
• First half distribution of 16.5 cents paid 14 August 2017
• Net Operating Receipts growth of 14.8%
• 103% covered by Net Operating Receipts
Increasing 2017 distribution guidance to 34.5 cents
per stapled security
• 11.3% growth on 2016 distribution
• 10.4% 5-year CAGR
• Expected to be fully covered by Net Operating Receipts
• Guidance subject to aviation industry shocks and
material forecast changes
Distribution per stapled security
31.0¢
25.5¢23.5¢
22.5¢21.0¢
34.5¢
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Financial results
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Business 1H17 highlightsRevenue
$m
Revenue
contribution
Revenue
growth
• 3.6% total passenger growth and 7.7% international
• Strong international capacity and load factor growth continuing
• Significant capital investment program supporting passenger experience, airline
operating efficiencies and capacity expansion to meet demand
364.21
• International terminal luxury precinct complete and additional stores opened in Pier C
• T1 Cityview food and beverage offering and T2 food court completed late 2016,
leasing complete and all stores open by Feb 2017
• Staged opening of new Marketplace in the international terminal, due for completion
in 2H17
• New duty free offering delivering strong growth
162.6
• Approximately 122 leasing transactions completed in 1H17; Property portfolio has
over 650 leases and continues to grow providing increasing facilities for our
passengers and airline customers
• 98.6% occupancy airport-wide
• Car rental business performed solidly
106.6
• Online revenue continues to form a larger proportion of revenues, 41% in 1H17.
Online parking products are supporting higher asset utilisation
• New domestic pick-up arrangements performing well, with priority and ride sharing
areas delivering improved circulation and revenue growth
• Ground transport works continue with a focus on reducing congestion and improving
customer experience
77.1
Aeronautical
services
Retail
Property and
car rental
Parking and
ground transport
8.0%
14.3%
3.3%
2.2%
51%
11%
15%
23%
Operational growth
All business units delivering strong performance
1. Includes aeronautical security recovery15
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Statutory income statement
$ MILLIONS 1H17 1H16
Total revenue and other income 714.2 661.9
Total expenses (137.2) (125.8)
EBITDA 577.0 536.1
Depreciation and amortisation (185.8) (172.4)
Profit before net finance costs and income tax (EBIT) 391.2 363.7
Net finance costs (203.9) (201.8)
Profit before income tax expense 187.3 161.9
Income tax expense (20.7) (2.3)
Profit after income tax expense 166.6 159.6
Add back: Profit attributable to non-controlling interests 0.4 0.4
Net profit attributable to security holders 167.0 160.0
Strong EBITDA growth and finance cost management
driving statutory income
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Profit to net operating receipts reconciliation
$ MILLIONS 1H17 1H16
Profit before income tax expense 187.3 161.9
Add back: depreciation and amortisation 185.8 172.4
Profit before tax, depreciation and amortisation 373.1 334.3
Add/(subtract) non-cash financial expenses - Capital index bonds capitalised 15.2 8.5
- Amortisation of debt establishment costs 6.5 10.6
- Borrowing costs capitalised (4.7) (4.6)
- Change in fair value of swaps (5.6) (13.6)
Total non-cash financial expenses 11.4 0.9
Add/(subtract) other cash movements - Movement in cash balance with restricted use 9.1 10.8
- Other (11.4) (13.1)
Total other cash movements (2.3) (2.3)
Net Operating Receipts 382.2 332.9
Net Operating Receipts (excluding WSA)1 382.8 332.9
Average stapled securities on issue (m) 2,249.9 2,229.5
Net Operating Receipts per stapled security (cents) 17.0 14.9
Net Operating Receipts per stapled security (excluding WSA) (cents) 17.0 14.9
Distributions declared per stapled security (cents) 16.5 15.0
Distribution is fully covered by Net Operating Receipts
171Western Sydney Airport (WSA) projects costs of $0.6 million were expensed during the half year ended 30 June 2017
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5.6x
6.0x
6.4x
6.8x
7.2x
7.6x
2.0x
2.4x
2.8x
3.2x
3.6x
4.0x
1H13 1H14 1H15 1H16 1H17
Capital management update
Strong balance sheet metrics
1. Debt metrics calculated for SCACH; EBITDA excludes WSA project costs expensed
2. Excludes capitalised interest, fair value of swaps and amortisation of debt establishment and other costs
Net debt $7.9bn
CFCR1 2.9x
Net debt : EBITDA1 6.8x
Credit rating BBB (positive) / Baa2 (positive)
Next drawn maturity Mid-2018
Average maturity Early-2024
Average cash interest rate2 4.9%
Spot interest rate hedge position 86%
6.8x
2.9x
Temporary increase due to T3 drawdown
Net Debt : EBITDACFCR
30 June 2017 Metrics
Debt Maturity Profile
CFCR1 and Net Debt : EBITDA1
217
160 200
100
$m
18
368
167
480 450
736
200
750
100
217
519
317
1,2711,199 1,200
802
1,033
643
1,163
659
438
136
387
0
250
500
750
1,000
1,250
1,500
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Drawn Bank Undrawn Bank Domestic Wrapped Bonds Domestic Unwrapped Bonds Offshore Bonds
Average Maturity
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Successful bank debt refinancing
$1.4bn of bank debt facilities successfully refinanced lowering
costs and risk
Significant de-risking of debt maturity profile
• Liquidity position maintained with $1.0bn in undrawn facilities
• All bank debt facilities refinanced at lower margins
• High quality banking group maintained
• Debt maturities over 2017-19 reduced by 82%
• Debt maturity profile diversified and lengthened
• Average debt maturity extended approximately six months to early-2024
Strong liquidity position maintained with funding objectives met
0
250
500
750
1,000
1,250
1,500
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
31 December 2016 30 June 2017
$m
Average Maturity
Refinance Risk
Significantly Reduced
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Delivering stable returns
Protections continue to ensure delivery of stable returns
Robust interest rate and currency hedging
• NOR per security volatility minimised; ±0.5c
change for every 1% movement in interest rates1
• 86% spot interest rate hedging (89% average last
five years) with replacement of maturing swaps and
constant topping-up of forward hedging position
• 100% currency hedging on foreign denominated debt
Multiple operating and financial protections
• Revenue certainty with long-term agreements:
– International aeronautical agreements (to 2020)
– Duty Free contract (to 2022)
– Terminal 3 pricing (to 2025)
• Stable and resilient passenger growth with a
diverse passenger, airline and destination mix
• 100% distribution coverage with Net Operating Receipts
• Proactive approach to capital management
with limited near-term debt maturities
• Maintenance of significant liquidity buffers
• Commitment to minimum BBB/Baa2 credit rating
Operating protections Financial protections
1. Annualised movement based on spot interest rate hedging position
• Sustainable growth over the past 25 years
delivered through numerous economic cycles:
• Traffic CAGR of 4.1%
• RBA cash interest rate range of 1.5% - 12.0%
• AUD/USD exchange rate range of 0.5 - 1.1
• Rising interest rates correlated to positive economic
growth and consumer sentiment, two key factors
in driving a passenger’s decision to travel
Natural Hedging
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Driving our growth
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Significant capacity additions sustaining
international traffic growth
Substantial additional capacity and high load factors delivering
sustained growth
Seat additions during the half
In the first 8 months, 15 airlines announced significant
seat additions, bringing a net benefit of 930,000 seats
and including:
Load factors across domestic and international
have increased over the past 5 years
Fastest growing nationalities in 1H17
Largest nationality growth in 1H17 by absolute
passenger numbers (‘000)
30%
22%
20%
16%
15%
8%
7%
7%
6%
6%
0% 5% 10% 15% 20% 25% 30% 35%
VIETNAM
PHILIPPINES
INDONESIA
CHINA
INDIA
MALAYSIA
GERMANY
UNITED STATES
SOUTH KOREA
AUSTRALIA
192
116
28
26
20
19
17
16
13
12
0 50 100 150 200 250
AUSTRALIA
CHINA
UNITED STATES
INDIA
NEW ZEALAND
UNITED KINGDOM
PHILIPPINES
INDONESIA
STH KOREA
VIETNAM
• 1 new airline
• 5 new routes
• 11 frequency increases or aircraft upgauges
75.0
%
75.3
%
75.0
%
76.6
%
77.5
%
77.9
%
1H12 1H13 1H14 1H15 1H16 1H17
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Passenger mix and capacity are
the important growth drivers
International passenger growth is forecast to continue to
outpace domestic growth
20
27
10
15
0
10
20
30
40
50
60
2006 2017 2026
Passengers (m pax)
Domestic International
+56%
International
growth
+35%
Domestic
growth
2039
Master Plan
forecasts
based on
latest views
on int’l and
domestic
growth
Domestic/
int’l pax
mix will
reflect the
two-airport
system
post-2026
International now 36% of total passengers;
expected to continue to outpace domestic growth;
delivering high value to Sydney Airport and the
economy
High value international aircraft utilise just 15% of
slots but international passengers drive 70% of
our revenues
Rolling 12 months to 30 June
23*Includes General Aviation movements without slot tenure (2-3% of slots)
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Traffic growth drivers
Positive outlook for all key traffic growth drivers
AFFLUENT
2012-22 CAGR 19.6%
UPPER MIDDLE CLASS
2012-22 CAGR 22.6%
MASS MIDDLE & POOR
2012-22 CAGR -3.3%
Strong economic growth continuing1 2
Aircraft size, range and seat density continues
to increase3
International trade and bilateral agreements
delivering growth in key markets4
Rising middle-class across Asia
1. Indicative growth rates to
midpoint of manufacturers
certified seat range.
B777-800
A350-1000
A380
1H 2017
SYD Avg
A320 NEO
B737 MAX9
1H 2017
SYD Avg
Narrowbody
AircraftWidebody
Aircraft
240
180170
332 350
517
+24%1
+31%1
1H 2017 – 332
Seats
1H 2016 – 326
Seats
PCP gauge growth
1.8%
Countries with open aviation agreements with Australia*
China Switzerland
Japan United Kingdom
New Zealand Singapore
United States
* As at 29 June 2017
NSW is sixth fastest growing economy in the OECD
Source: http://www.mckinsey.com/industries/retail/our-insights/mapping-chinas-middle-classSource: http://www.treasury.nsw.gov.au
0%
5%
10%
15%
20%
25%
30%
35%
40%
Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
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A redefined retail product resonating with the customer
demographic delivering significant yield improvement
Strong retail performance following duty free
completion and shop openings
Business highlights for 1H17
• All three terminals fully leased with continued strong retailer demand for space
providing opportunities for ongoing repositioning
• Duty free delivering strong growth with standout performance in
core categories liquor, perfume and cosmetics
• The new 1,900 square meter fashion precinct in T1 is now complete,
showcasing 13 global designer brands with sales outperforming business
case
• 47 food and beverage outlets in T1 delivering an elevated dining experience
with a focus on fresh food and global chef partnerships
• Delivering a superior passenger experience with continued focus on value,
range and choice, proven via strong retail sales, passenger satisfaction scores
and positive sentiment across social and media coverage
Future opportunities
• Considering options for 10 additional retail stores in T2 Pier B, to be open late
2018
• Substantial lease renewal opportunities at T2 and T3, spreading lease maturities
• Following strong success airside, two celebrity chefs have secured unique food
offerings in the T1 landside food court
• HEINEMANN Tax and Duty Free have recognised additional sales opportunities
and as a result are investing instore ahead of schedule
• Continuous evaluation of space for highest and best use 25
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Ground transport access and product improvements are
delivering better customer outcomes and a solid performance
Ground transport product improvements and
modal choice are a key focus
Business highlights for 1H17
• Dedicated new areas driving strong growth in limousine and ridesharing services
• Continue to see modal shift to the train, a great outcome for peak periods, driving
customer experience improvements
• Strong take up on new guaranteed space product
• Four new floors on multi storey car park in T1, ~1,000 spaces, expected opening
August
• Pedestrian and cycle bridge (including bicycle storage) due to open September
Ground Transport plan progress
• New exit from Marsh St complete, now providing faster access to
Departures Rd for vehicles from the south and M5
• Airport road construction expected to be completed by end of 2017,
ahead of schedule
• Expected completion of
– new arrivals and departures exit in T1
– an additional lane from Marsh Street
– flyover road for traffic from the East and North
• Government works expected to have staged completion though 2018-19
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Customer choice and property portfolio bolstered
by new hotels business
New hotels will meet the significant unmet demand
and drive new revenue streams
• Significant demand for hotel rooms in Sydney
• Acquisition of Ibis airport hotel in July for $34.5 million
• Provides additional choice for customers seeking convenient
access to Sydney Airport, as well as tourists to Sydney
Hotel strategy
New hotels – Domestic precinct
Hotel Description
Mantra
opening
• $24.5 million investment
• 136 room mid range hotel
• Convenient walk to the domestic terminals
Ibis airport hotel
acquisition
• $34.5 million investment
• Features 200 rooms and a brand new café
• Located adjacent to the Mantra
• Significant customer demand for hotels: passenger, crew and
disruption
• Working on expansions and other new hotel opportunities in
the domestic and international precincts
• New AMG Mercedes performance centre opening December
• Solar rooftop of P6 multi storey car park, delivering carbon
saving and reducing reliance on fossil fuels, powering the
lights for the car park and producing excess electricity
• Plane spotters lookout facility, for community aviation
enthusiasts opening end August.
• Freight strategy, proposing to develop freight facilities on the
Northern Lands, along with a common user freight bypass
Future opportunities
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Significant investment program to deliver growth
and airline requirements
Terminal 4 North
and South and/or
aircraft apron
development
North-East
aircraft apron
expansion and
enhancements
T1 Pier A
(3 new gates)
and baggage
expansion
South-West
Sector aircraft
apron
enhancements
South-South-East
Sector apron,
terminal or other
aeronautical
facilities
Continued terminal and airfield investment to deliver
aeronautical capacity and customer experience improvements
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Investment supported by aeronautical
agreements
Commercially negotiated airline charges agreements support
investment, capacity increases and improvements in customer
experience
2015/16 2016/17 2017/18 2018/19 2019/20
Inte
rnati
on
al p
assen
ge
r ch
arg
e
escala
tio
ns
+4.8%
+4.3%
+3.4%
+2.7%
3.8% growth
between 2015-2020
• Growing at 3.8% p.a. between 2015 and 2020
• Charges are competitive and compare favorably against
international airports
• Aeronautical charges beyond 2020 to be determined by
commercial negotiation and future investment requirements
International aeronautical charges are commercially
negotiated
• Reiterating 2017-2021 capex guidance of $1.3 billion and
~$450 million (including Ibis airport hotel) in 2017
• Aeronautical capex linked to international aeronautical
prices (increased 4.3% from 1 July 2017)
• Continuing to consult on additional contact gates, baggage
capacity and aircraft aprons, in 2017-21, ~$500 million
dependent on scope of projects
Reiterating capex guidance
International airline agreement aeronautical charges
Aeronautical charges
beyond 2020 to be
determined by
commercial agreement
(including future capex)
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Vital transport links to the airport, port and
surrounding communities
Advocacy for airport road access improvements and more
affordable public transport
• On-airport road construction to be complete end of 2017
• State government expect a staged completion of works
through 2018 and early 2019
• Continued advocacy for more and affordable public transport
options for passengers and airport workers
Working together with governments and local communities to achieve positive transport outcomes
and modal choice for customers and the community
• We welcome the government’s announcement of an
additional 200 airport train services a week, by end of 2017
• Greater co-ordination with the NSW transport management
centre to facilitate airport and surrounding road traffic
forecasting and best use of resources and overflow facilities
• Encouraging active transport with the provision of the
pedestrian and cycle bridge and bicycle storage facilities
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Outlook
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Outlook
Record inbound traffic growth, strong business performance and
excellent capital management outcomes underpin a positive
outlook
• Sydney Airport's tourism partnerships, airline marketing and
competitiveness are driving strong economic outcomes for
NSW and Australia
• Most significant investment program since privatisation
delivering airline product and efficiencies, and improved
customer experience
• Improved Service level KPI outcomes and Customer Service
scores reflect investment and high quality customer
experience initiatives
• Five year investment guidance of $1.3bn supported by
aeronautical charges
• 2017 distribution guidance upgraded to 34.5c per stapled
security
• Sustainability leadership and investment delivering positive
outcomes for customers, airlines, our people and the
community
Track record for our strategy delivering positive outcomes to customers
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Questions
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APPENDIX
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Investment merits
Sydney Airport is one of the world’s highest quality
airport investments
99 year leasehold • Lease until 2097
Catchment area • 7.5m Sydney and NSW catchment population
Strong passenger
growth profile
• Sydney is both a business and tourism hub, in a growing NSW economy
• Strong visiting friends and relatives, education and tourism market
• Strong Asian connections – increasing urbanisation
International passengers • Account for ~70% of passenger driven revenues
• Represent 15% of slots
Commercial opportunities • Substantial growth opportunities
• Minimum guarantees offer downside protections
• Strict hurdle rates of return apply to all investment
Light handed
regulatory framework• Commercially negotiated charges agreements with all airlines include investment, price and service levels
• Light handed regulatory framework supports dual till principle
Outsourced model • Controllable operating costs contracted and traffic relatively inelastic
Consistent growth and
downside protections
• Long term contracts with airlines and tenants
• CPI or higher escalation on commercial revenues
• Growth initiatives across all businesses
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Sydney Airport’s contribution
Sydney Airport is a major generator of economic
activity and jobs
Economic activity $30.8 billion contributed in economic activity per annum, equivalent to 6.4% of the NSW economy
Jobs generated 306,700 jobs generated or facilitated, equivalent to 8.9% of NSW employment
Freight $14.6 billion of freight exports facilitated
Visitor nights International visitors arriving in Sydney spent 66 million nights in NSW in 2014
Pre-paid package expenditure $92 per night
Household income $14.7 billion contributed to household incomes
Average airport wages Average FTE wage of an employee working in the Sydney Airport precinct is 12% higher than NSW average
Additional daily A380 $451 million contributed to NSW economy from an additional daily A380 service to Sydney from China
Source: Deloitte Access Economic report titled “The economic contribution of Sydney Airport” – April 201536
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Long term traffic growth
Resilient passenger growth across all economic cycles and
events
0
5
10
15
20
25
30
35
40
45
1990 1991 1992 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1H17
Annual P
ax (
Mill
ions)
International Domestic & Regional Total
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Highly diversified passenger and destination mix
Significant diversity in airlines, passengers and
destinations served by Sydney Airport
Diverse purpose of travel of Sydney
Airport’s international visitors (%)
Foreign residency breakdown (%)
Australian destination breakdown (%)
1. Source: DIAC, data recorded by residency and final destination – 12 Months to May 2017
48%
52%
48%
23%
4
16
9
Holiday
VFR (visiting friends & relatives)
Other
Business
Education
OtherChinaNew ZealandUSAUKKoreaJapanSingaporeHong KongIndiaCanadaGermanyMalaysiaIndonesiaFrance
OtherUSANew ZealandIndonesiaChinaUKFijiThailandJapanSingaporeIndiaHong KongPhilippinesVietnamCanadaItaly
(9)
(8)
(6)
(6)
(4)
(3)
(2)
(2)
(2)
(2)
(1)
(1)
(1)
(1)
(1)
(23)
(15)
(14)
(7)
(6)
(6)
(5)
(5)
(3)
(3)
(3)
(3)
(2)
(3)
(2)
(2)
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Announced capacity highlights for first half 2017
New seat additions contribute to positive growth outlook for
second half of 2017
Route Airline Annual seats
Doha Qatar Airways 260,000
Taipei China Airlines 223,000
Auckland Qantas 175,000
Beijing Qantas 171,000
Ho Chi Minh Jetstar 140,000
Abu Dhabi Etihad 123,000
Hanoi Vietnam Airlines 85,000
Wuhan China Eastern 72,000
Hong Kong Cathay 65,000
Qingdao Beijing Capital 46,000
Seoul Asiana 44,000
Denpasar Bali Qantas 35,000
Jakarta Garuda 21,000
Manila Cebu Pacific 17,000
Seoul Korean Air 11,000
Osaka Qantas 10,500
Xiamen Xiamen Air 9,500
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Thank you
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